Auto insurance can be complicated… Every year, you get your declarations page in the mail and you don’t know what half of it means. You quickly page to the back and look at the change in your premium, but What exactly are you paying for? What coverages do you actually need, and what are the key things to look for? We thought it would be helpful to make a guide of the 10 key elements of an auto insurance policy in Lancaster PA. These 10 keys will better help you understand your policy, and even make you sound like a seasoned insurance professional when shopping for a new auto policy.
1. Bodily Injury Coverage
The first term to know on an auto insurance policy is bodily injury coverage. This type of coverage is required by the state of Pennsylvania, and it protects the other party in the event of an accident. In the state of Pennsylvania, the bodily injury minimums are $15,000 per person and $30,000 per occurrence. These minimums are long overdue for an update, so we recommend carrying coverages of $100,000 per person and $300,000 per occurrence. Any amount below these recommendations could put you at risk of being underinsured.
2. Property Damage Coverage
Just like the bodily injury coverage, the state of PA requires drivers to carry property insurance in the event of an accident. In Lancaster Pennsylvania, drivers are required to carry a minimum of $5,000 in property damage coverage. As we mentioned previously, the minimums are clearly outdated so we recommend carrying a higher property damage coverage amount, at least $100,000. In today’s world, if you cause damage to another person’s property or vehicle the state minimum would not get you very far as the technology integrated into the modern-day vehicle is expensive to replace. Another concern with carrying the state minimum for property damage coverage is that someone might come after you because you did not carry the adequate limits to pay for the damage you caused.
3. Deductible(s)
A deductible is the amount of money that you choose beforehand to cover your vehicle. In other words, this is the amount of money you have opted to pay out of pocket before the insurance company steps in to cover the remainder of the claim. The deductibles apply for your vehicle’s Comprehensive and Collision coverage which we’ll explain next.
4. Comprehensive Coverage
Comprehensive coverage covers things that happen to your vehicle that are generally NOT your fault. In the insurance industry, it is sometimes referred to as “other than collision” or everything else besides running into something. Some events that fall under this type of coverage are a rock cracking your windshield, hitting a wild animal (deer or bear), a tree falling on your car, or your car being vandalized. These are all events that you cannot control.
As far as deductibles are concerned for this type of coverage, we recommend setting a lower deductible, around $250, to ensure that your windshield claims are covered. If you have a higher comprehensive deductible, you will pay for most of the smaller claims, such as a windshield claim that generally costs less than $500 to replace.
5. Collision Coverage
Collision coverage covers anything that happens to your vehicle that IS your fault or is caused by you hitting something with your car. Some events that fall under this type of coverage are rear-ending another car, hitting a building, hitting a mailbox, or hitting a telephone pole. These types of claims are typically more expensive, so we recommend carrying a higher deductible of around $500.
6. First-Party Benefits
First-party benefits are items that protect you. Some of the first-party benefits available to you in Pennsylvania are medical expenses, income loss, funeral expenses, accidental death, and extraordinary med benefits that were incurred because of an accident. So, if you are injured, unable to work, or killed in an accident, this portion of your auto insurance would kick in and pay a pre-defined limit for those related expenses. These are not required by the state of PA, but they are nice add-ons to have to protect you if something significant were to happen to you in an auto accident.
7. Tort / Tort Option
Tort or tort option is essentially your ability to sue someone after an accident has occurred. In Pennsylvania, there are two tort options, full or limited tort. Full tort is generally more expensive because it allows you to sue the at-fault individual for anything. For example, if you get into an accident that was not your fault and your wrist is hurting weeks after the accident and you are unable to play golf or pickleball as well as you did before the accident, you can sue the person at fault for the pain and suffering if you have full tort on your auto insurance policy.
Limited tort is just how it sounds, it limits what you can sue the at-fault party for. In the same example above, you would not be able to sue the at-fault person because the damages are only minor. However, if you were to become paralyzed because of the accident, you could then sue the at-fault party. The whole goal of the limited tort option is to restrict the number of lawsuits and issues that individuals have with each other based on car accidents. So, the choice is yours, full tort, or limited tort?
8. Uninsured & Underinsured Motorist Coverage
This type of coverage insures you if you are hit by someone who does not have insurance or does not have enough insurance. An example of a claim that would be covered by this type of coverage would be if you were involved in a hit-and-run accident and suffered serious injuries. You would not know who hit you so you would not be paid from that driver’s bodily injury limits on their auto policy. To fill in that gap in coverage, your policies Uninsured motorist coverage would kick in and provide some support. Another example in which this type of coverage would kick in would be if the at-fault party is only carrying the state minimum of $15,000 for bodily injury, you will only receive $15,000 from their insurance company and all other expenses will rest on you. This is when the Underinsured coverage would kick in to help cover medical expenses.
We recommend matching this coverage amount with your bodily injury liability limits. Some insurance companies and insurance agents will try to cut this down to help save you money, but we strongly advise keeping the amounts the same as you never know when you might need the extra coverage.
9. Gap Coverage
Gap coverage fills the gap between what you owe versus what your vehicle is worth because the moment you drive a brand-new vehicle off the lot, the depreciation of it is crazy. So, if you were to get into an accident with your brand-new car, the insurance company would pay you the actual cash value for your vehicle and the depreciated amount, but that does not always cover the amount that you still owe for the loan. Gap coverage covers that gap, and the insurance company will pay the amount you have on your loan to make sure you are never upside down.
10. Roadside Assistance
Roadside assistance is similar to the popular service provided by AAA. Roadside assistance on your auto insurance policy helps cover the cost of towing or any other expenses that are needed to get your vehicle back up and running when you are stranded along the side of the road. Some events that fall under this type of coverage are if your vehicle gets stranded, has a dead battery, or you locked your keys in your car.
So, there you have it, the top 10 terms you ought to know for your auto insurance policy. Next time that you go to get a quote, or you are talking with your agent about what coverages you might have, you now know what you are talking about and are able to ask key questions about your auto insurance policy. If you have any questions about your current policy or would like us to review it to make sure that it is up to par, feel free to reach out via phone call or email. Susquehanna Insurance is an independent agent that writes primarily with Erie Insurance in Lancaster PA but can shop around with a variety of other insurance companies to find the most competitive auto insurance rate for you.